Alberta farmers fretting about big commodity price swings can take some solace — there is an up side.
Low volatility in pricing usually means low prices overall, said Charlie Pearson, a provincial market analyst with Alberta Agriculture and Rural Development.
“If farmers like making money, they better be prepared to live with volatility. That is the new world.
“The difference between too much and too little isn’t a lot and the markets will respond to that.”
Pearson provided an encouraging snapshot of Alberta agriculture in a state of the crop industry address at the Alberta Agricultural Economics Association conference in Red Deer on Friday.
“I think in 2010 we had a pretty darn good year,” he said. Crop yields were good and pricing was relatively strong.
This year, the situation also looks good. There are extremely tight crop supplies worldwide, which means higher prices.
“On the good side, in terms of risk assessment, farmers know how to respond to good prices. If you have good prices you put in more acres, you spend a little more on inputs, you do some of the right things to increase production.”
Weather is always a factor, but that is not looking too bad in most areas as well.
“We still look ahead and we did our analysis we still see a pretty darn good optimistic situation,” he said.
There is always risk though in a global economy. A major weather event, political instability and soaring oil prices could have an impact on crop prices, both positive and negative.
Among opportunities for Alberta farmers is the increased global demand for food.
Farmers must also keep an eye on consumer trends to maximize their income, he said.
Alberta farmers have a lot going for them. They have embraced technology and increased productivity.
“We see that as a real strength going forward.”
Canada also has a sterling market reputation and good connections with Asian markets.
“We really have preferred access to Southeast Asia. That’s a strength that we probably need to build on as we go forward.”
There are weaknesses too. There is little opportunity to expand the farming land base in Alberta and regulatory barriers are still faced because of crop diseases and European resistance to genetically modified foods. There is also the question of whether Canada is funnelling enough into agriculture research.
pcowley@www.reddeeradvocate.com